Moscow, 20 February 2008. RAO "UES of Russia" is very
serious about the information released by the Economic Security Department of the Russian
Ministry of the Interior (ESD) on the measures being taken to ensure safety and security
in the electricity sector.
RAO "UES of Russia" appreciate it that the ESD is raising
issues which, despite all efforts taken by the Company's top managers, have not been
addressed in the sector for many years.
Specifically, because of the rationing of the so-called
"limit" gas supplied at regulated prices, RAO UES generation companies had to
switch to more expensive fuels, chiefly fuel oil, or to purchase gas at higher prices from
intermediaries in order to ensure reliable power supply to customers. The extra costs
associated with the purchase of gas at market prices have been taken into account in the
tariffs set for the next year.
RAO UES has on various occasions requested the regulator to provide for
the statutory volumes and terms of gas supply at regulated prices. However, this complex
issue still remains unresolved.
Over the past few years, RAO UES and Gazprom have taken some joint
measures to address the issue. Specifically, last year saw the first steps taken to
conclude long-term contracts for the supply of "limit" gas and
"extra-limit" gas. With respect to "limit" gas supplies, all
generation companies of RAO "UES of Russia" have entered into five-year
contracts with Gazprom's retail companies fixing the gas volumes and formulas for the
calculation of gas prices. Work is currently underway to make long-term contracts for the
supply of gas in excess of the limit.
Besides, Mezhregiongaz operates an electronic trading venue where
generation companies can purchase natural gas at market prices if gas transportation to
their facilities is available.
In order to safeguard the interests of consumers, both private
individuals and legal entities, especially during the transition to a competitive
electricity market, Customer Relations Groups have been created in all regions of Russia.
Customers are now able to approach these Groups with their questions and complaints.
Moreover, RAO UES together with the energy related ministries and
agencies is working proactively to formulate the regulatory framework and enforcement
measures intended to strengthen control over the competition compliance in the electricity
In addition, in order to avoid potential conflicts with the grid
companies, on the one hand, and electricity consumers and generators, on the other, RAO
UES has approved the master terms and conditions for the connection to the grids, as well
as the standard form of connection agreement. The Company is also developing a Standard
for information disclosure on customers' requests for connection to the power grids, the
results of their review, and the timing for connection measures. The Standard is designed
to increase transparency of the activities of RAO UES grid companies relating to customer
connections, and enable customers to oversee the connection process undertaken by the
energy companies. These documents are to ensure that the activities of RAO UES grid
companies are as transparent as possible and to prevent violations in the grid sector.
We at RAO "UES of Russia" are confident that the creation of
energy companies engaged in the core activities— electricity generation, transmission,
dispatching and retailing in accordance with the package of laws and resolutions of the
Russian Government* has made their operations much more transparent and controllable.
In this connection, RAO "UES of Russia" would like to
emphasize that it does not agree with the allegations made by the ESD as a result of its
measures that "the reform of RAO "UES of Russia" may lead to an increased
number of economic and tax crimes in this sector".
* Since 2001, 83 legislative acts have been adopted as part of the
process to develop and reform the Russian electricity sector, including 16 Federal Laws,
46 Resolutions and 21 Orders of the Russian Government.